Stocks Turn Higher Amid Optimism About Trump-Xi Meeting - U.S. Commentary

(RTTNews) - After recovering from an early move to the downside, stocks moved mostly higher over the course of the trading session on Friday. The major averages more than offset Thursday's modest losses, adding to the strong gains posted earlier in the week.

The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow climbed 199.62 points or 0.8 percent to 25,538.46, the Nasdaq advanced 57.45 points or 0.8 percent to 7,330.54 and the S&P 500 rose 22.40 points or 0.8 percent to 2,760.16.

With the rebound on the day, the major averages moved sharply higher for the week. The Nasdaq soared by 5.6 percent, while the Dow and the S&P 500 spiked by 5.1 percent and 4.8 percent, respectively.

The strength that emerged on Wall Street seemed to reflect optimism ahead of a highly anticipated meeting between President Donald Trump and Chinese President Xi Jinping.

Trump and Xi are due to hold a dinner meeting on Saturday on the sidelines of the G20 summit in Buenos Aires, Argentina.

Ahead of the meeting, Trump has offered mixed remarks about the likelihood the U.S. and China will reach an agreement to end the escalating trade dispute between the world's two largest economies.

"I think we're very close to doing something with China, but I don't know that I want to do it because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes. So I really don't know," Trump said Thursday before departing for the summit.

"But I will tell you that I think China wants to make a deal. I'm open to making a deal," he added. "But, frankly, I like the deal we have right now."

In U.S. economic news, MNI Indicators released a report unexpectedly showing a substantial acceleration in the pace of growth in Chicago-area business activity in the month of November.

MNI Indicators said its Chicago business barometer spiked to 66.4 in November after falling to 58.4 in October, with a reading above 50 indicating growth in business activity. Economists had expected the index to edge down to 58.0.

The unexpected jump reflected increases across all five of the barometer's subcomponents, with resurgent orders, solid output and higher unfinished orders the month's key drivers.

Sector News

Utilities stocks showed a significant move to the upside over the course of the trading session, resulting in a 1.8 percent jump by the Dow Jones Utilities Average.

Considerable strength was also visible among transportation stocks, as reflected by the 1.3 percent advance by the Dow Jones Transportation Average. With the gain, the average reached its best closing level in well over a month.

Semiconductor stocks also turned in a strong performance on the day, driving the Philadelphia Semiconductor Index up by 1.5 percent.

Pharmaceutical, software and healthcare stocks also moved notably higher, while oil service stocks fell sharply amid a pullback by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan's Nikkei 225 Index rose by 0.4 percent, while Australia's S&P/ASX 200 Index tumbled by 1.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index fell by 0.4 percent and the U.K.'s FTSE 100 Index slid by 0.8 percent.

In the bond market, treasuries saw continued strength after ending the previous session slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.2 basis points to a two-month closing low of 3.013 percent.

Looking Ahead

Reaction to news regarding the Trump-Xi meeting is likely to drive trading early next week, while the monthly jobs report is likely to be in focus toward the end of the week.

Traders are also likely to keep an eye on Congressional testimony by Federal Reserve Chairman Jerome Powell as well as reports on manufacturing and service sector activity, construction spending and factory orders.